Google expands with AOL Europe

BambiFrancisco

SAN FRANCISCO (CBS.MW) -- In a bid to tap into the growing paid-search business in Europe, Google said it expanded its partnership with AOL Europe.

Google
GOOG, -3.99%
which already provides AOL Europe with targeted advertisements, said its expanded multi-year arrangement will let it target the U.K., France and Germany. These three countries give Google's advertisers an additional potential reach of 6.3 million AOL members. AOL is a unit of Time Warner
TWX, -0.75%
Financial terms were not disclosed.

International revenue accounts for 31 percent of Google's total revenue, according to Mark Mahaney, an analyst at American Technology Research. Global expansion can be a significant driver as international growth rates are two to three times faster than in the U.S., Mahaney said.

Google's broader search audience of European consumers follows its beta launch of Google desktop toolbar last week that performs searches on a user's computer contents.

Google will be making its first quarterly report as a public company on Thursday after the market close.

Ahead of the results, shares of Google traded slightly lower at $149. Earlier in the session, Google touched $150, or about 76 percent higher than its mid-August IPO price of $85.

Google is expected to earn 54 cents a share on sales of $452 million in the third quarter. Looking forward, analysts are pegging Google's fiscal fourth-quarter results to be a profit of 63 cents per share on sales of $520 million. The search engine's co-founders have said they won't be providing forecasts.

On Tuesday morning, American Technology's Mahaney said that Google's "bogey" for the September quarter is to grow search revenue by 13 percent quarter over quarter.

Mahaney estimates that Yahoo grew its search sales by 12 percent quarterly. Yahoo does not break out its search revenue from its banner and rich-media advertising, making it difficult for investors to track the performance. But other analysts have set similar search-revenue growth rates.

Following Yahoo's better-than-expected report, Mahaney, who lowered his rating on Google two weeks ago to a "sell," revised his expectations for Google's third quarter.

Mahaney said he expects Google to earn 59 cents a share on revenue of $467 million. Both numbers are well above the consensus figures. But some analysts expect Google to earn as much as 61 cents a share on revenue as high as $477 million.

Mahaney is also maintaining his "sell" rating, though he said in his note that the "strength in Yahoo's search revenue, relative to branded advertising and fees revenue, surprised us." These results gave him "less conviction in this [sell-on-Google] call."

It will be interesting to note how much detail or color Google's executives will give investors on the conference call following Google's report.

But one question likely to come up is whether Google has any plans to launch a browser to compete with Microsoft
MSFT, -2.17%

"Our industry checks make us think this is very much in the works," said Mahaney. "And, our thinking treats this as almost a necessary move for Google."

EBay and Amazon.com

EBay Inc.
EBAY, -1.15%
which blamed a maturing market and pronounced seasonality for a slower-than-expected quarter three months ago, is gearing up to report third-quarter results on Wednesday, after the close of trading. The last time eBay reported, Chief Financial Officer Rajiv Dutta said eBay was becoming more "mainstream" and that its third-quarter would see an "amplified" slowdown because of seasonal issues.

The question today is, with eBay heading into its busiest two quarters of the year, will seasonality work in its favor this time?

Shares of eBay fell 33 cents to $$94.37.

Amazon.com
AMZN, -2.43%
which saw its shares inch up 18 cents to $39.45, is on deck to report on Thursday, after the close. Last week, the Seattle-based retailer told CBS MarketWatch that it doesn't have any announcements to make regarding Netflix Inc.'s
NFLX, -2.79%
assertion that Amazon.com was planning to enter the DVD rental market soon.

Netflix CEO Reed Hastings told CBS MarketWatch that he expects Amazon.com to begin the service within the next six months. The competitive threat compelled Netflix to lower its monthly service to $18. In response to Netflix's action, Blockbuster
BBI, -3.75%
said it would lower its monthly rental fee to $17.49, beginning the week of Oct. 25, down from its original price of $19.99 at launch on Aug. 11. "We can be profitable at $17.49 by leveraging our in-store inventory to satisfy online demand," said Shane Evangelist, general manager Blockbuster Online.

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